South Korean equities continued to retreat Monday, with the Kospi down more than 40% from its June high as investors questioned whether artificial intelligence spending could be sustained. Goldman Sachs has cut its index target by a quarter, although its revised forecast still points to substantial gains over the next year.
Around noon in Seoul, the Korean stock benchmark dropped as low as 5,455, a decline of 1.7% from Friday’s 5,550.30 close. Among the country’s largest memory-chip producers, Samsung Electronics shares dropped more than 1% while SK Hynix moved between both territories.
The losses come ahead of earnings releases from SK Hynix on Wednesday, October 28, and Samsung on Thursday, October 29. Both companies are entering the reporting week with surging profits, but weaker investor confidence as concerns about AI expenditure put pressure on their stock valuations.
Goldman’s note replaced a 12,000 Kospi forecast with a 9,000 target, reversing direction after several increases earlier this year. Measured against the October 23, 2026, close, the new 12-month objective represents approximately 62% upside, while the benchmark yielded 27% gain so far this year.
The reduction stems from lower valuation assumptions rather than a forecast of sharply deteriorating earnings. Underlying that distinction is the market’s unusually low earnings multiple. The Kospi is priced at roughly four times forecast profits for the coming 12 months, an uncommon valuation among major stock markets.
For semiconductor shares, Goldman calculates that prevailing prices effectively anticipate a 65% decline in 2027 earnings. Its strategists regard that implied outcome as too pessimistic.
Outside memory chips, businesses representing approximately half of the benchmark carry a forward earnings multiple of 7.6. Goldman also sees opportunities in power, industrial companies and businesses positioned to benefit from corporate governance changes.
The forthcoming results will give investors more than profit figures to examine. Their assessment will also cover the clarity of future orders, pricing, margins and cash generation.
